Macroeconomic Imbalances in the United States and their Impact on the International Financial System

Julia S. Loe

Chapter 7 in Minsky, Crisis and Development, 2010, pp 127-141 from Palgrave Macmillan

Abstract: Abstract While most economies grow through investment or export which expands demand, the US economy has kept up its growth by increased consumption. Using its privileged position to borrow money, the United States has reached a historically unprecedented level of current account deficit, which has been followed by a debt crisis in 2007–2008. This chapter argues that the financial crisis of 2007–2008 is symptomatic of macroeconomic imbalances in the United States, because the imbalances eventually are resolved in financial markets, and passed on to the real economy. On the other hand, the international financial system is dependent on US trade deficits for feeding liquidity into financial and commodity markets.

Keywords: Current Account; Housing Market; Government Bond; Asset Market; Current Account Balance (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-29232-1_8

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DOI: 10.1057/9780230292321_8

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